UK inflation slips to three-year low after early high street sales

Hotel sector also contributes with 7.5-per-cent accommodation price drop in November and December

UK inflation has slipped lower on the back of early high street sales and discounted hotel rooms.

Figures from the Office for National Statistics (ONS) show the Consumer Price Index was 1.3 per cent last month, down from 1.5 per cent in November.

It marked a three-year low for inflation, having last been lower in November 2016.

The figure was below analysts forecasts of 1.5 per cent and is likely to stir up demand for an interest rate cut, following hints from the departing governor of the Bank of England Mark Carney that a cut could be used to stimulate the economy.

Mike Hardie, the head of inflation at the ONS, said: “Inflation eased in December as prices for hotel stays dropped.

“Women’s clothing prices also fell, with more items being discounted.”

The largest downward contribution to falling inflation was the hotel sector, as overnight hotel accommodation prices dived 7.5 per cent between November and last month, compared with a rise over the same period in 2018.

Falling clothes prices were the second-largest drag on inflation as retailers heavily discounted women’s fashion ahead of Christmas.

The ONS said 15.2 per cent of items were on sale in December, increasing from 10.9 per cent in the same month a year earlier.

The statistics body said that heavy discounting was particularly focused on the high street, with retailers cutting prices on women’s jackets, cardigans, formal trousers and skirts.

The rate of food inflation also slowed down as the price of sugar, jam, chocolate and confectionery slumped 2.1 per cent, although this was partially offset by more expensive vegetables.

Meanwhile, the price of alcoholic drinks fell further, driven by 4.2 per cent lower beer prices and a 3.9 per cent drop in spirits prices.

These factors offset increased inflation for furniture, electrical appliances and mobile phone chargers during the month.

The Retail Price Index, a separate measure of inflation, was 2.2 per cent in December, flat from the same figure in November.

The Consumer Price Index, including owner-occupiers’ housing costs – the ONS’s preferred measure of inflation – was 1.4 per cent in December, down from 1.5 per cent in the previous month.

© Associated Press